strategy+business^ issue^9692
retailer for books, outcompeting traditional brick-and-mortar retailers such as
Barnes & Noble, and has since evolved it into an online retailer offering any-
thing that can be sold online and shipped.
The focus on technology and logistics helped keep costs low, and enabled
Amazon to vastly increase product variety. That, in turn, began to make it the
go-to online shopping portal. But Amazon tapped into deeper capabilities to
create a flywheel effect with consumers. It mined data to understand consumer
preferences, and shaped buying behavior and convenience by introducing such
features as one-click ordering and free shipping through Amazon Prime. Over
time, the company also expanded into businesses that had nothing to do with
retailing: online content streaming; Amazon Web Services, which provides
cloud computing services; and new physical products such as Kindle (e-reader),
Fire (digital media player), and Echo (smart speaker assistant). Echo’s Alexa has
become the technology backbone for interoperability for countless devices ex-
ploiting the Internet of Things. This has created another causal loop, as making
more devices interoperable on Alexa led to more integration and convenience,
leading to higher customer sales, driving more suppliers to integrate with Alexa.
Through these many evolutions, Amazon has retained its founding identity of
being a customer-driven and technology-led retailer. Bezos wrote in a famous
letter to shareholders, “Staying in Day 1 requires you to experiment patiently,
accept failures, plant seeds, protect saplings, and double down when you see cus-
tomer delight.” Amazon’s capabilities system in supply chain and logistics; cus-
tomer insights and preferences; and online, retail, and technology platform in-
novation have all been unparalleled.
Peloton, a fitness startup whose US$2,000 stationary bicycles and high-en-
ergy classes have gained a cult following since its founding in 2012, started out
as a software player, but has since focused directly on every aspect of the value
chain, including software, hardware, studio instructors, logistics, and even retail.
As CEO John Foley tells the story of its evolution (“Business cycle,” s+b, Jan. 9,fea
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